Kraken looking for new board member—’yes men’ only please

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Kraken has opened the floor up to LinkedIn in its search for a new board member.

It first seems very strange for the cryptocurrency exchange to leave this candidate hunt to LinkedIn. A directorship is an important position in any company – particularly one which operates on murky legal ground, as Kraken does. However, reading the advertisement, it seems that this is a search that would only ever be conducted on LinkedIn.

For instance, the job posting is suspiciously scant on details regarding the role itself (for example, it doesn’t indicate where this role is to be based). Instead, it concerns itself exclusively with the credentials of the ideal candidate, and even those are vague:

• Strong interest in the advancement of financial technology innovation
• Previous experience as a founder or CEO, or C-suite exec (COO, CFO, CPO, or CRO)
• A proven track record scaling growth companies from 1,000 employees to 5,000+
• Experience operating a public company
• Deep expertise in the technology and/or financial services industries
• Prior board member and/or advisory experience

The above bullet points are as specific as the job posting gets. I am struggling to imagine any competent directors (let alone former c-suite executives) responding to a directorship request via LinkedIn, let alone one with so little information about the directorship itself. It would seem that Kraken is quite disinterested in whichever candidate they secure through this posting.

That could be the point, though.

Kraken and exchanges like it have been the subject of regulatory investigations, criminal prosecutions and lawsuits. Indictments are being handed down against the people running these exchanges, and there are undoubtedly more to come.

Kraken CEO Jesse Powell himself has been open about his willingness to ignore the rules: New York’s regulatory regime caused Kraken to flee the state and set up shop in California, and Powell called the regulatory requirements in New York “so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.” Kraken was also the subject of a voluntary information request from the New York Attorney General after the latter indicated that Kraken may still be operating illegally in New York. Kraken ignored the request.

Somebody has to say what everybody's actually thinking about the NYAG's inquiry. The placative kowtowing toward this kind of abuse sends the message that it's ok. It's not ok. It's insulting. https://t.co/sta9VuXPK1 pic.twitter.com/4Jg66bia1I

— Jesse Powell (@jespow) April 18, 2018

For Kraken to lazily advertise a directorship position on LinkedIn would be very on-brand for them. Note that when listing the c-suite executives they feel would be suitable for the position, there is no mention of Chief Legal Officer or Chief Compliance Officer. This is a highly intriguing omission given that the arguably less-relevant titles Chief People Officers and Chief Relationship Officer are included. So, while the job listing pays lip service to scaling their operations compliantly, there appears to be no interest in actually attracting someone with experience in that area. In fact, the omission is so great that borders on being a euphemism for “Honest Candidates Need Not Apply.”

And why should they? A competent director with an interest in compliance is the last thing an exchange hoping to stay non-complaint would want. Staying non-compliant is an exceedingly arrogant move but in-keeping with Powell’s expressed distaste toward regulators. It’s also a common feature of the exchanges that have been targeted by regulatory investigations and criminal indictments so far: the BitMEX employees being indicted were on record bragging about moving their business to the Seychelles because bribery there was cheaper, for example. Illegitimate digital asset companies often proudly evade, flout, and undermine the law and then act surprised when the law is enforced against them.

If they could, I’m sure Kraken would be happy to install a hand-picked patsy to the position. It’s widely known in the digital currency industry that Powell was nominated by Roger Ver as CEO of Kraken. Ver, who is a founding investor yet is somehow unaffiliated with the company, would probably already have filled the vacancy were it not for the same reasons stopping him from acting for Kraken in any official capacity: he’s a convicted felon.

The various statutes governing companies and financial institutions typically see felony convictions as a disqualifying characteristic from holding an executive position. For example, Kraken’s 2018 $13.5 million fundraiser was able to escape SEC registration as a public offering (and all of the scrutiny and investor protections that comes with it) by relying on the provisions of Rule 506 under Regulation D of the Securities Act 1933. Had any director (or other affiliated persons) been convicted of a felony, that exemption would have been disqualified.

And so, Kraken turns to LinkedIn to find their new director. If you’re looking for a job, feel free to apply—so long as you leave any fantasies of compliance at the door.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.